In a regulatory filing, Biogen
BIIB, -3.22%
said the case names Chairman William Rastetter and Chief Executive James Mullen as defendants. The suit was brought on behalf of shareholders who purchased Biogen stock from Feb. 18 to Feb. 25. Biogen added that a similar class action suit had been filed in Massachusetts on March 10.

"The Company believes that the actions are without merit and intends to contest them vigorously," the Cambridge, Mass.-based company said in its filing.

Biogen shocked the biotechnology world on Feb. 28 when it announced its newly approved drug Tysabri, hailed by some as a breakthrough in the treatment of multiple sclerosis, was being pulled from the market.

The company said it was pulling the drug after a patient in a Phase III clinical trial testing a combination therapy of Tysabri and Avonex, Biogen's other MS treatment, had contracted a potentially deadly brain infection called multifocal leukoencephalopathy, or PML, with a second case suspected.

The second case was confirmed several days later. The first PML patient has since died.

Because PML is extremely rare, the company elected to suspend all sales and clinical trials of Tysabri until it can determine what triggered the disease, the company has said.

On Feb. 17, Biogen reported that a Phase III clinical trial testing Tysabri as a solo therapy yielded promising results in MS patients, with few serious side effects. The next day, top executives say they were told about Tysabri's troubles.

Since Tysabri's withdrawal, the company has had several shareholder suits filed against it. Biogen's filing on Wednesday also updated the status of those cases.

It added that on March 4, a shareholder derivative action was filed in a Delaware state court charging, amongst other things, that the company's officers breached their fiduciary duties to shareholders and improperly awarded bonuses to upper management.

The suit also charges Rastetter, a Biogen director, and Biogen former general counsel Thomas Bucknum with insider trading. A similar case was filed in the same court on March 14, according to Biogen.

Biogen added it also faces two derivative shareholder suits in California state court, naming the company, its board and its chief financial officer as defendants.

On Feb. 15, Rastetter sold $8.2 million in stock. One day earlier, on Feb. 14, Biogen vice president for human resources Craig Schneier sold $233,000 in stock while board director Robert Pangia sold $1.1 million shares. On Feb. 18, Bucknum exercised about $6 million in options, netting him about $1.9 million.

Bucknum abruptly resigned on March 9, after almost 10 years with the company. Biogen has declined comment on the reason for his resignation. Bucknum reportedly has hired an attorney specializing in securities law.

Chief Executive Mullen has said that the company first was informed at least one Tysabri patient had contracted PML on the morning of Feb. 18. He said the company notified the Food and Drug Administration with the news later that day.

Prior to Feb. 18, Mullen said researchers were not sure exactly what was ailing the two patients, as PML is such a rare disorder.

"We had very sketchy information on either one of those cases at that point," Mullen told Marketwatch during an interview last week at the SG Cowen annual healthcare conference.

According to Mullen, Biogen senior management is permitted to trade their stock options under two different scenarios.

The first is under the company's 10B51 plan, whereby the potential trading plans are filed in advance with the Securities and Exchange Commission and then automatically executed.

"It's like a blind trust plan," said Mullen.

Mullen said that officers could also trade Biogen stock themselves, providing they had no material information and followed the company's trading policy.

Under Biogen's trading policy, Feb. 18 would have been the first trading window open to senior management after the company released results from its Phase III trial of Tysabri as a solo therapy, considered to be a material event. The results were released at 2:30 AM ET on Feb. 17.

According to Mullen, both Rastetter and Schneier traded under the 10B51 plan. Meanwhile, Pangia and Bucknum traded their stock independently and therefore would have had to adhere to Biogen's insider trading policy.

"You can also trade, and it's perfectly permissible and people do it all the time, within one of the defined windows, as long as you don't have any material information," Mullen said last week.

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